New York Markets After Hours

U.S. stock futures decline on fiscal-cliff fears

KateGibson

WilliamL. Watts

An earlier version of this story misspelled the name of Rebecca O’Keeffe, head of investment at Interactive Investor.

NEW YORK (MarketWatch) — U.S. stock futures fell Monday on worries that President Barack Obama and Congress would not reach agreement to avert steep spending cuts and tax hikes set to start next month.

“We expect policy makers to continue negotiations later this week. We still believe a deal will get done to avoid the majority of the fiscal drag, but it may not happen until early in the new year,” emailed William Stone, chief investment strategist at PNC Financial Services Group.

Futures on the Dow Jones Industrial Average
US:DJH3
fell 27 points, or 0.2%, to 13,109. S&P 500 futures
US:SPH3
dropped 3.5 points, or 0.2%, to 1,422.40, while Nasdaq 100 futures
US:NDH3
moved down 4.75 points, or 0.2%, to 2,655.75.

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Hopes that lawmakers and the White House would agree on a plan to avert around $600 billion in spending cuts and tax hikes set to take effect Jan. 1 were dealt a blow late last week after House Speaker John Boehner failed to persuade fellow Republicans to back a package dubbed “Plan B” that would have raised taxes on households earning more than $1 million annually. See: Boehner holds out hope for fiscal cliff deal.

“With no Plan B and the gulf between the parties as wide as ever, there is little to cheer this holiday season. The optimism that had seen the market rally strongly over the last few weeks is diminishing rapidly amid signs that a deal is as far away as ever,” said Rebecca O’Keeffe, head of investment at Interactive Investor in London.

Economists fear that failure to avoid the cliff could knock the U.S. economy into recession, dragging global growth down along with it.

Lawmakers over the weekend said there remains time for a deal but acknowledged time is running short.

U.S. markets close early Monday at 1 p.m. Eastern for Christmas Eve and resume trading on Wednesday.

Research In Motion Ltd.
US:RIMM
shares fell 1.7%. The smartphone maker, which is scheduled to release its BlackBerry 10 line in early 2013, fell 23% on Friday after the company offered a vague response to a question on a conference call about how it would handle service fees on its new BlackBerry 10 platform. See: Fuzzy answers on service fees hit RIM.

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